U.S. Independent System Operators (ISOs) are creating short-run markets
for so-called “flexiramp”. Theaim of these markets is to ensure that enough
flexible generation capacity is on-line to manage theincreasingly volatile net
loads resulting from growth in renewable energy. In particular, we assume
thatthe purpose of flexiramp is to improve the expected performance,
in terms of costs, prices, and reliability,of the ISOs’ deterministic market models.
Therefore, we compare the solutions of (1) a
deterministicdispatch model with a flexiramp constraint
that simulates ISO operations with (2) a stochastic dispatchmodel
that, by definition, obtains schedules that minimize expected cost.
Dispatch, prices, settlements,and market efficiency are contrasted
in a simplified case study to explore the fundamental reasons forsuccesses
(and failures) of flexiramp markets. The results illustrate how
flexiramp can enhance marketefficiency. However, they also show
that procuring flexiramp is insufficient to minimize expected costs,
and that market parameters affect the quality of the solutions.
The simulations furthermore show thatdeterministic markets with
flexiramp can yield either higher or lower prices than the stochastic
optimum.We propose a penalty-based approach to mitigate possible biases
towards choosing capacity with highenergy costs to provide flexiramp,
and conclude that market operators will need to monitor marketperformance
and adjust flexiramp parameters in order to maximize market efficiency.
Electric Power Systems Research 109 (2014) 128-140